Inside South Korea’s Offline Vaping Market: Disposable Products Hard to Find as THP Competition Heat

Two observations: almost all convenience stores in South Korea sell cigarettes and heat-not-burn products, but most stores do not have vaping electronic cigarette products.

[Two observations from Seoul, South Korea] On September 22, Two observations visited the offline electronic cigarette market in Seoul, conducting on-site visits to over twenty convenience stores, including well-known chains like 7-11, CU, and GS25. It was found that almost all convenience stores sell cigarettes and heat-not-burn products (THP), but most stores do not have vaping electronic cigarettes (Vape) (Note: In South Korea, electronic cigarettes generally refer to heat-not-burn products, while vaping electronic cigarettes are referred to as "liquid electronic cigarettes"). 

Local chain convenience store CU | Source: Two observations 

Vaping electronic cigarettes hard to find 

It is understood that the main wholesale market for electronic cigarettes in South Korea is in Busan, with most electronic cigarette retail stores concentrated in Busan and Seoul. Seoul is the capital of South Korea and also the most populous city, with a population of 9.91 million. The area of Yeouido, where Two observations visited, is known as "the Manhattan of Korea", and all shops in this area sell heat-not-burn tobacco and cigarettes. In 7-11 chain stores, there are heat-not-burn products from Philip Morris International (PMI), British American Tobacco (BAT), and Korea Tobacco & Ginseng (KT&G); promotional materials for related products were also seen outside the 7-11 stores. 

7-11 chain store | Source: Two observations 

Promotional materials for heat-not-burn products at 7-11 chain store | Source: Two observations 

However, in these chain stores, Two observations did not see any disposable vaping electronic cigarettes. The tobacco products offered in these stores are limited to cigarettes and heat-not-burn tobacco sticks. It wasn't until visiting a small non-chain store that Two observations finally saw vaping electronic cigarette products. However, these products were placed in a very inconspicuous position, almost impossible to notice. When Two observations asked the staff if they had vaping electronic cigarettes, the staff only then took this product out from under the shelf. The electronic cigarettes sold in that store mainly included Bubblemon and another electronic cigarette brand. 

Vaping electronic cigarette products | Source: Two observations 

Two observations asked the staff to recommend the currently best-selling electronic cigarette, and the staff handed over a grape-flavored, 4.8 ml Bubblemon brand electronic cigarette, priced at 19,000 won (approximately 104 yuan). From the shopping receipt, it can be seen that the price of this electronic cigarette product includes a 10% tax; the packaging information indicates that this product is made in China, but specific production company information is not specified. 

Vaping electronic cigarette in South Korea | Source: Two observations

In addition, the store also sells BAT's Vuse go vaping electronic cigarette, which has a 2 ml e-liquid content and is priced at 10,000 won. This product has clear promotional materials on the counter. However, unlike other convenience stores, this electronic cigarette was not displayed on the shelf here. Additionally, many convenience stores do not sell vaping electronic cigarettes, only heat-not-burn products.

Vuse go electronic cigarette | Source: Two observations 

Heat-not-burn products dominate 

From the observations in South Korean offline stores, it is noted that the price of disposable electronic cigarettes is relatively high. 

For example, in stores selling heat-not-burn tobacco sticks, the price of IQOS brand tobacco sticks is 4,500 won and 4,600 won, while a pack of cigarettes also costs around 4,500 won. Based on the standard that a 2 ml e-liquid can be used for 600 puffs, this capacity of disposable electronic cigarettes is equivalent to a pack of traditional cigarettes. This means that the price of the 19,000 won electronic cigarette is equivalent to 4.22 packs of traditional cigarettes or heat-not-burn products.

A lottery and tobacco sales store | Source: Two observations 

It should be noted that the price of disposable electronic cigarettes also includes the cost of the device, while traditional cigarettes do not require additional devices, and the heat-not-burn tobacco sticks also include device costs.

Two observations have observed on the streets of South Korea that more and more people are choosing to use heat-not-burn products, and this trend is gradually becoming mainstream. Data from the Korea Tobacco Control Research and Education Center shows that from 2017 to 2022, the sales volume of heat-not-burn tobacco sticks in South Korea increased by 6.8 times, from 78.7 million boxes to 538.6 million boxes. In just the first half of this year (January to June), 292.6 million boxes were sold, and it is expected that the total sales volume for this year will exceed 600 million boxes for the first time.

According to industry insiders in South Korea, disposable and other vaping electronic cigarette products experienced significant market changes in 2019. That year, due to the outbreak of severe lung disease incidents among teenagers in the United States, the South Korean government issued a directive strongly recommending the cessation of vaping electronic cigarettes, especially advising children, teenagers, pregnant women, individuals with respiratory diseases, and non-smokers to avoid using liquid electronic cigarettes.

In reports from South Korean economic news, third-party data indicated that in 2020, a year after the government recommended stopping the use of vaping electronic cigarettes, the sales of liquid electronic cigarettes plummeted by 97.6% compared to the previous year, and this market nearly disappeared in South Korea.

Two observations learned from a local individual in South Korea that the regulation of electronic cigarettes is very strict. The 2019 government directive led to the complete removal of vaping electronic cigarettes from convenience stores, and even now, these chain convenience stores do not sell vaping electronic cigarettes. Additionally, this individual mentioned that it is also very difficult for electronic cigarettes to enter through “special means”, as government enforcement is very strict.

South Korea's tax law classifies electronic cigarette liquids made from natural nicotine as cigarettes, thus imposing an inland tax of 1,799 won (1.32 USD) per milliliter. In contrast, electronic cigarettes made from synthetic nicotine derived from chemical materials are not classified as cigarettes and are exempt from cigarette consumption tax.

In South Korea's tobacco market, new tobacco products are almost dominated by heat-not-burn (THP) products. According to a survey by the South Korean Ministry of Strategy and Finance, KT&G's Lil accounts for about 48% of the market share, PMI's IQOS accounts for 42%, and BAT's Glo accounts for 10%. Meanwhile, two other major international tobacco companies—Imperial Brands (IMB) and Japan Tobacco (JTI)—have basically exited the South Korean market.

In convenience stores, PMI's IQOS Iluma device has launched promotional discounts in South Korea. Promotional material images show that the left one is Iluma one, reduced from 69,000 won to 49,000 won (approximately 377 yuan); Iluma is reduced from 99,000 won to 79,000 won (approximately 432 yuan).

KT&G's heat-not-burn product LIL occupies a prominent position in offline stores. KT&G has established a solid marketing network in South Korea, but PMI is using promotional activities to lower market prices by reducing the prices of the IQOS Iluma series electronic cigarettes to capture market share.  

Two observations found that the vaping electronic cigarette market in South Korea faces some challenges. Although BAT has introduced its Vuse go product, the overall market acceptance of vaping electronic cigarettes in South Korea is relatively conservative.

A GS25 convenience store | Source: Two observations

Currently, large chain convenience stores in South Korea have not widely stocked vaping electronic cigarette products, which also limits the market penetration of these products. Consumers face many purchasing obstacles when buying vaping electronic cigarettes, and there is not yet a clear sales scene for vaping electronic cigarettes in the South Korean market.

However, as global demand for healthier smoking options continues to grow, the vaping electronic cigarette market in South Korea may change in the future. With the relaxation of regulations in South Korea and a shift in attitudes towards vaping electronic cigarettes, more electronic cigarette manufacturers are likely to enter the South Korean market, and this market will gradually adapt to global trends.